Zimbabwe is running out of wheat because the central bank won’t provide foreign currency needed to pay for a consignment of the grain, the Grain Millers’ Association of Zimbabwe said.
The country only has 28,028 metric tons of wheat stored, compared with a three-monthly requirement of 114,000 tons, Lynette Veremu, general manager of the association, said in a Sept. 4 letter to millers seen by Bloomberg. The document, stamped ‘Trade Secret,’ was verified by the association.
While the GMAZ has sufficient funds to pay for the wheat, which is stalled at the port of Beira in neighboring Mozambique, a payment of $12.5 million is needed before U.K.-based Holbud Ltd. will release the grain, Veremu said. The central bank won’t provide the funds, using them instead to pay for imports of gasoline and diesel, she said.
“Wheat and fuel are both in Category 1 of the Reserve Bank of Zimbabwe’s foreign-payment remittance priority list,” Veremu said. “Regrettably, fuel gets $21 million per week religiously, but wheat is not getting a paltry $12.45 million for the entire national monthly requirements.”
Cash Shortage
Zimbabwe doesn’t have its own currency, with the government adopting a basket of foreign currencies including the U.S. dollar and South African rand as legal tender in 2009 after hyperinflation rendered the local dollar worthless. The country has faced a cash shortage for at least the past two years, as businesses and individuals moved money offshore and the nation’s import bill increased after exports had collapsed.
Central bank Governor John Mangudya wasn’t available to comment when Bloomberg called him on Thursday, but he earlier told the Harare-based Daily News newspaper that the bank had “arranged letters of credit for the procurement” of 40,000 tons of wheat a month.
Holbud may divert the wheat at Beira to millers in Mozambique and Malawi unless it receives payment, Veremu said. Retailers and bread bakers are already running short of flour in parts of the country, she said.
A person who answered the phone at Holbud’s offices in London said no one was immediately available for comment.
Source: Bloomberg
